Texas Judge Blocks FTC Noncompete Agreement Ban

A federal judge in Texas, U.S. District Judge Ada E. Brown, has blocked a Federal Trade Commission (FTC) rule aimed at banning noncompete agreements, which was set to take effect on September 4. Brown ruled that the FTC lacks the authority to impose such a broad ban, labeling it 'arbitrary and capricious' due to insufficient justification for its sweeping nature. The rule, approved by the FTC in a 3-2 vote, was designed to enhance worker mobility and increase wages, potentially benefiting millions of employees. The decision has prompted disappointment from the FTC, which is considering an appeal, but it still retains the option to pursue individual enforcement actions against noncompete agreements. Approximately 30 million workers have signed such agreements, which critics argue hinder competition and worker rights. This ruling comes amid ongoing legal challenges from business groups against the FTC's regulatory powers over noncompete clauses.